For a while now, the term “big data” has been tossed around quite a bit to describe how data is changing worldwide data management. At its core, big data is simply a term used to define any information that cannot be stored, processed, and analyzed on existing regular computing hardware today.
What makes big data different from all other types of information? Essentially, the three Vs in the term stand for volume, variety, and velocity.
- Volume – The volume is constant growth. Data increases in size daily at an exponential rate. The four big websites alone (Facebook, Amazon, Google, and Microsoft) generate 1.2 million terabytes of data. This means the amount of information available over the Internet today is greater than all other information combined.
- Variety – The variety is high in both structured and unstructured data. Structured data is information organized into a database, such as a customer list with each name, address, and city listed in rows and columns on a spreadsheet or database. This type of information can be easily categorized and served to the appropriate people when needed. The majority of the data collected today is unstructured. Data can be text, images, video, audio recordings, or sensor readings from the Internet of Things (IoT). This information cannot be easily categorized when received and, therefore, must go through an extensive modeling and analysis process to make it useful.
- Velocity – The velocity is speed. Data moves at 1,000 times the speed of all other forms of communication. The average human can type 60 words per minute, but a data warehouse server can easily process over 1 million rows in a second as new information becomes available from multiple sources.
The Benefits of Big Data
Nowadays, we have so much data coming at us so fast that companies can store and process all of this data. It is also not simply creating more data. It is analyzing existing information in a way that has never been possible before. That’s why to make sense out of them; companies need to work on the ideal database design for their needs.
But why should businesses need to gather and understand this immense amount of information? It offers the following advantages:
1. Identify Changes in the Industry
Companies today must be able to quickly identify changes in the market, customer demand, competitor activity, or even new product innovation. Analyzing large volumes of data enables managers and executives to make more informed decisions about company direction and strategy at a much faster pace.
2. Better Customer Experience
Today, companies can communicate more effectively with their customers by knowing more about their needs and buying behavior. Big data provides organizations with the ability to identify the best time to make contact with a customer, understand what they are looking for, and deliver personalized offers at scale.
3. Improve Operations and Efficiency
Big data is capable of helping companies improve customer satisfaction, operational efficiency, and profitability. For example, by analyzing large amounts of data at the moment of sale, merchants can identify customers who are likely to leave without making a purchase (known as walkaways), which helps them make more accurate decisions about promotions and offers.
4. Prepare for the Future
Companies are using big data to forecast future customer needs and wants. This allows organizations to prepare for potential shifts in demand before they happen, which can help them minimize unplanned costs.
Another example of how big data can be used is by considering that 80 percent of people decide what products to buy within just one week of purchase. By knowing this, companies can predict customer needs and adjust to changing consumer sentiment.
5. Develop New Business Models
Big data is also creating entirely new ways for businesses to generate revenue. Today, we live in a world where information knows no bounds, and customers expect greater relevance and immediacy from the brands they interact with. This shift has created a demand for new business models that put the customer experience at the core of what they do.
6. Enhance Predictive Modeling
With big data, companies can enhance predictive modeling, which allows them to better forecast market conditions and future demand for products or services. Therefore, organizations can identify new opportunities to improve their operations by using predictive analytics that combines machine learning, artificial intelligence, statistical algorithms, and data mining.
For example, companies use big data and predictive modeling to help them make better decisions about initiating or stopping production on specific products based on expected demand soon.
While big data presents many opportunities, it also challenges us to rethink the fundamental nature of today’s information infrastructure. As we make decisions about how we structure and store our data, we must keep in mind that all types of information do not require the same level of storage and processing power.
Deciding how to manage big data involves considering the appropriate investment level for new infrastructure, software, skills development, and integration with existing systems.